Wheat prices rise to $10 per bushel
By: Jonathan Knutson , The Dickinson Press
GRAND FORKS — A ferocious rally has pushed cash spring wheat prices above or close to $10 per bushel, and that’s expected to trigger a wave of selling.
The higher prices, which include $9 and more per bushel for new crop wheat, also are likely to lead farmers to lock in advance sales for a portion of their 2011 wheat crop.
“These prices are generous,” and pricing some of the 2011 crop now “would be smart,” says Frayne Olson, crops economist/marketing specialist with the North Dakota State University Extension Service.
But he cautions producers, especially in areas where conditions may hamper spring planting, not to sell too much in advance.
Wheat prices have roughly doubled since summer, when drought hammered Russia, a major wheat exporter. Prices have shot even higher since January, in part because some countries are buying food to ward off potential food-related protests.
In early January, the average price for spring wheat with 14 percent protein was $8.45 per bushel at area elevators surveyed weekly by Agweek.
In early February, the average price per bushel had surged to $9.90, an increase of 17.1 percent.
Not everyone benefits
Keep in mind that most wheat harvested last fall has been sold for less than $10.
For one thing, discounts, or price reductions, are applied on wheat that falls below desired quality levels.
“The discounts can add up,” says Garner Eeg, a Greenbush, Minn., wheat producer.
For instance, a producer who sold wheat for $8 per bushel might have received only $6.50 after discounts, he says.
And while firm numbers are impossible to come by, most of the 2010 wheat crop had been sold already, for much less than $10 per bushel. In fact, many farmers sold some of their 2010 wheat before the rally began, for $5 per bushel and less.
Storage considerations forced some farmers to sell wheat sooner than they wanted and at relatively low prices, says Randy Englund, executive director of the South Dakota Wheat Commission.
Wheat typically is harvested before corn and soybeans, so some South Dakota producers sold wheat early to make sure they’d have storage later for corn and beans, he says.
“We’re not seeing a lot (of selling). Most of them are holding on to it,” Galen Lennick, manager of New Sales Farmers Union, says of farmers with unsold wheat.
His elevator was offering $10 per bushel for spring wheat with 14 percent protein.
Cold, snowy weather may be discouraging producers from selling grain and bringing it to the elevator, he says.
Some farmers also may be waiting to see if prices go even higher, he says.
Producers generally have no immediate need to generate cash to pay expenses, which can influence when they sell, Olson says.
Rising prices for wheat and other crops grown in the region have a downside, Englund says.
The higher prices are being followed by higher input costs. Higher crop prices also contribute, though only in a minor way, to higher food costs, he says.
He says he’s already heard some complaints from the public about higher food prices.
But $10 wheat — a level achieved only during the 2007 to ‘08 grain price spike — is something to enjoy, Englund says.
“It just feels good,” he says.
Knutson is a reporter for Agweek,
which is owned by
Forum Communications Co.